Clarke, Adrian John
An Assessment of Supplier Development Practices in a Retail Environment with Particular Reference to Boots the Chemist.
[Dissertation (University of Nottingham only)]
An organisations ability to control, adapt and improve its supply chain can significantly impact its competitive position (Drucker, 1982). For retailers, the supply base contributes almost three quarters of their total costs.
Within manufacturing, organisations have been moving from predominantly adversarial, short-term, transactional relationships with their suppliers, to longer-term collaborative relationships. Automotive manufacturers in Japan were leading this, and it has since transferred to western manufacturing organisations.
Supplier development has been a pillar of these collaborative relationships, and is defined as - Any set of activities undertaken by a buying firm to identify, measure and improve supplier performance and facilitate the continuous improvement of the overall value of goods and services supplied to the buying companys business unit(Krause et al 1998).
Within this definition are two distinct types of engagement. The first is externalised supplier development, where the customer measures performance, and provides incentives for the supplier to improve. The second is internalised. In this case the supplier provides resource and investment to enable them to improve.
Whilst there is much literature on supplier development activity in the manufacturing sector, there is relatively little on retail supplier development.
This dissertation looks at supplier development, and in particular internalised supplier development, to understand the current best practise processes. It includes identifying the factors that drive successful implementation, in both manufacturing and the available retail examples.
Using the Boots supply base as the source of data, it then seeks to answer the following questions - What opportunities exist to improve the supply chain, reduce costs, and add value for the consumer, through retailers implementing development programmes to work collaboratively with suppliers? Is the supplier development model that has been successful in manufacturing appropriate for retail, or do the differences in the relationship require a new approach to be developed? What barriers in retail prevent the adoption and sustainability of supplier development?
The research indicates that there are untapped opportunities to reduce cost and increase effectiveness of the supply chain. However, there are limited efforts to work collaboratively with suppliers, primarily due to a lack of strategic vision and direction of the retailers. The examples of successful implementation in retail illustrate this well, as they have an over-arching strategic reason behind the collaboration that has driven the organisation to overcome the barriers.
The conclusions are applied in the form of recommendations for the Boots the Chemist to implement proactive supplier development.
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